Cash America 2011 Annual Report Download - page 61

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proceedings, even if it is not a party to those proceedings. Any of these events could have a material adverse effect on
the Company’s business, prospects, results of operations and financial condition and could impair the Company’s ability
to continue current operations.
Judicial decisions, CFPB rule-making or amendments to the Federal Arbitration Act could render the arbitration
agreements the Company uses illegal or unenforceable.
The Company includes arbitration provisions in its consumer loan agreements. These provisions are designed to
allow the Company to resolve any customer disputes through individual arbitration rather than in court and explicitly
provide that all arbitrations will be conducted on an individual and not on a class basis. The Company’s arbitration
agreements do not generally have any impact on regulatory enforcement proceedings.
The Company takes the position that the Federal Arbitration Act requires the enforcement of the Company’s
arbitration agreements and their class action waivers in accordance with their terms. The Company believes that the U.S.
Supreme Court’s decision in the AT&T Mobility v. Concepcion case, holding that consumer arbitration agreements
meeting certain specifications are enforceable, will now reduce the possibility that lower courts will rule that the
Company’s arbitration agreements with class action waivers are unenforceable. The AT&T Mobility v. Concepcion
decision was rendered on April 27, 2011. Notwithstanding two recent rulings from a Pennsylvania federal district court
and another ruling from a Texas federal district court enforcing the Company’s arbitration agreements with class action
waivers in reliance on the AT&T Mobility v. Concepcion decision, further challenges to the enforceability of arbitration
agreements with class action waivers will likely continue to be brought in an effort to limit the precedential effect of the
AT&T Mobility v. Concepcion decision. If those challenges are successful, the Company’s arbitration agreements could
be unenforceable.
In addition, the U.S. Congress has considered legislation that would generally limit or prohibit mandatory
arbitration agreements in consumer contracts and has adopted such a prohibition with respect to certain mortgage loan
agreements and also certain consumer loan agreements to members of the military on active duty and their dependents.
Further, the Dodd-Frank Act directs the CFPB to study consumer arbitration and report to the U.S. Congress, and it
authorizes the CFPB to adopt rules limiting or prohibiting consumer arbitration, consistent with the results of its study.
Any such rule would apply to arbitration agreements entered into more than six months after the final rule becomes
effective (and not to prior arbitration agreements).
Any judicial decisions, legislation or other rules or regulations that impair the Company’s ability to enter into
and enforce consumer arbitration agreements and class action waivers could significantly increase the Company’s
exposure to class action litigation as well as litigation in plaintiff-friendly jurisdictions. Such litigation could have a
material adverse effect on the Company’s business, results of operations and financial condition.
The Company’s business depends on the uninterrupted operation of the Company’s facilities, systems and business
functions, including its information technology and other business systems.
The Company’s business, particularly its online lending business, depends highly upon its employees’ ability to
perform, in an efficient and uninterrupted fashion, necessary business functions, such as internet support, call centers,
and processing and making consumer loans. Additionally, the Company’s storefront operations depend on the efficiency
and reliability of the Company’s point-of-sale system. A shut-down of or inability to access the facilities in which the
Company’s internet operations, storefront point-of-sale system and other technology infrastructure are based, such as a
power outage, a failure of one or more of its information technology, telecommunications or other systems, or sustained
or repeated disruptions of such systems could significantly impair its ability to perform such functions on a timely basis
and could result in a deterioration of the Company’s ability to write and process internet consumer loans, perform
efficient storefront lending and merchandise disposition activities, provide customer service, perform collections
activities, or perform other necessary business functions. Any such interruption could materially adversely affect the
Company’s business, prospects, results of operations and financial condition.